Fed’s Kohn appointed to Bank’s FPC

Donald Kohn, the former vice-chair at the Federal Reserve, on Thursday was one of four members appointed as an external member of the Bank of England's new interim Financial Policy Committee (FPC).

Kohn, who left the Fed in the summer, has worked with the Bank before. In 2000, he was asked to review the procedures followed by the then-nascent Monetary Policy Committee.

Alastair Clark, a visiting professor at Cass Business School, Michael Cohrs, the former co-head of investment banking at Deutsche Bank, and Richard Lambert, the former director-general of the Confederation of British Industry, a trade body, are the other external members named by George Osborne, the chancellor of the exchequer, to join the new macroprudential body, also launched Thursday.

Thursday's appointments bring the total number of voting members on the FPC to eleven, with Mervvn King, the Bank's governor, Charlie Bean, Paul Tucker and Hector Sants, King's three deputies; and the Bank's executive directors for markets and financial stability, Paul Fisher and Andrew Haldane, the six representatives from the Bank on the FPC. Adair Turner, the chairman of the Financial Services Authority (FSA), will fill the eleventh voting seat. There will also be two non-voting members; Martin Wheatley, the chief-executive-designate of the Financial Conduct Authority, formerly known as the Consumer Protection and Markets Authority; and a Treasury representative. The establishment of the FPC, which will be tasked with macroprudential supervision, follows an overhaul of the UK regulatory framework to a 'twin-peaks' format, which will also see the abolition of the FSA.

King, who will head the interim FPC, said he welcomed the new appointments and looked forward to the challenge of contributing to a "more stable financial system".

On February 3, the UK's Treasury Select Committee said given the close links between the internal members, external members would "play an essential role in ensuring the committee does not succumb to organisational groupthink" and even backed appointing six rather than four voting external members. Two of the external members are former Bank employees. Clark spent 36 years at the Bank as executive director for financial stability and then as an adviser to the governor on financial sector issues. Lambert was a member of the Bank of England's Monetary Policy Committee from 2003 to 2006. Kohn, a 40-year veteran of the Federal Reserve, served as vice-chairman of the Board of Governors at the Federal Reserve from 2006 to 2010 before retiring last year.

The select committee also stressed that given the nature of the work it would be undertaking, it was vital that some members of the FPC had recent senior experience in the financial services industry. Cohrs has 30 years of investment banking experience having joined Goldman Sachs in 1981.

The set-up of the macroprudential committee is months behind schedule. A consultation paper from the Treasury in July, which set out the bones of the new structure, said that an interim FPC would be established "by the autumn".